G.R. No. L-21483. April 28, 1969
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. THE COURT OF TAX APPEALS, HON. MARIANO NABLE, PRESIDING JUDGE, HON. AUGUSTO M. LUCIANO, HON. ROMAN M. UMALI, ASSOCIATE JUDGES A…
CAPISTRANO, J.:
This is a petition for certiorari and prohibition with
preliminary injunction. It seeks to set
aside the orders of the respondent Court of Tax Appeals dated April 15, 1963 and June 20, 1963 in CTA Case No. 1264 entitled “Vicente Kho vs. Commissioner of Internal Revenue.” The first order
denied the Commissioner’s motion to dismiss the petition of Vicente Kho whereby he sought review of the decision rendered by
the Commissioner imposing upon Vicente Kho a certain
amount as deficiency income tax. The
second order denied the Commissioner’s motion for reconsideration.
On October 20, 1952, the
then Collector (now, and hereinafter referred to as, Commissioner) of Internal
Revenue wrote respondent Vicente Kho demanding from
the latter payment of his deficiency income tax for the calendar year 1951
amounting to P1,128,444.00. It
appears, however, that this letter of demand and the accompanying assessment
notice dated November 5, 1952 were not effectively served upon respondent Vicente Kho in due course by reason of the fact that he had
transferred his residence from Guiuan, Samar, to Cebu City without the knowledge of the BIR Commissioner. Despite the fact that the letter of demand
and the assessment notice had not been effectively served upon respondent
Vicente Kho, he must have obtained personal knowledge
of the assessment levied against him.
Vicente Kho must have already been informed of
this tax deficiency, when on December 18, 1952 the Commissioner of Internal
Revenue wrote the Provincial Fiscal of Samar recommending
immediate prosecution of Vicente Kho for willful neglect
to file his income tax return for the year 1951 in violation of Sec. 45 of the Internal Revenue Code penalized under
Sec. 73 thereof. In view of his
knowledge of the assessment levied against him, he retained the services of
tax consultant Juan G. Mañiego who in January, 1953
wrote the Bureau of Internal Revenue disputing the assessment and at the same
time requesting that he be authorized to consider the possibility of an
amicable settlement of the case and that the criminal charge be held in
abeyance. Respondent Vicente Kho was given 10 days to take up the case with the
BIR. On January 24, 1953, respondent Vicente Kho,
thru counsel, requested for an extension of time within which to reply to the
assessment letter. Said request was
granted by a letter of the Commissioner of Internal Revenue, dated January 27, 1953. On February 10, 1953, respondent Vicente Kho,
thru counsel, again requested for an extension of time until March 15, 1953 to discuss the case with the BIR, which request was
granted. In view of his illness, Atty.
Juan G. Mañiego, counsel for respondent Vicente Kho, addressed a letter to the BIR Commissioner, dated March 18, 1953, requesting for an extension of time until March 31, 1953. This request
was denied by the Commissioner. In view
of this denial, Counsellor Juan G. Mañiego sent a reply dated March 28, 1953 where he emphatically stated that the books and records
seized by the BIR from the establishment in Guiuan,
did not belong to his client Vicente Kho. On April
29, 1953, the Deputy Collector (now, and hereinafter referred to as, Deputy
Commissioner) of Internal Revenue wrote counsel for Vicente Kho
advising him that in the absence of documentary proofs to substantiate the
allegations contained in his letter, the BIR could not reconsider its
decision holding, his client liable for the payment of the deficiency tax
mentioned therein. On July 7, 1953, respondent, thru counsel, wrote another letter
addressed to the Commissioner of Internal Revenue reiterating that he did not
own the books and records seized from the store in Guiuan,
Samar. He contended
that he should not be made liable for the tax assessed against him based on
said documents.
Meanwhile, a deportation case
against Vicente Kho was being tried before the
Deportation Board. Thereafter, or on June 14, 1959, the record of said deportation case was forwarded
to the President of the Philippines. Based on the
recommendation of the Deportation Board, the President issued an order
directing the deportation of respondent Vicente Kho. However, it appears that the order of
deportation was not released due to political influence exerted on behalf of respondent
Vicente Kho.
On January 25, 1954, respondent Vicente Kho
personally received the letter of demand of October 20, 1952 and the assessment notice dated November 5, 1952.
On September 27, 1954, Vicente Kho’s new counsel,
Eddy Dean, by letter offered to compromise respondent’s income tax case for the
sum of P15,000.00, which was denied. On March 23, 1956, respondent hired another lawyer, Artemio
Lobrin, who wrote a letter to the BIR Commissioner
requesting for a decision on the merits of the case, or, in the alternative,
a favorable action on his offer to settle the case. This was not acted upon. On August 20, 1962, another lawyer for Vicente Kho,
Orlando V. Velasco, wrote a letter to the BIR Commissioner requesting for
reinvestigation of the case of his client, which request was not granted. Another lawyer acted for and in behalf of
respondent Vicente Kho in the person of Francisco Remotigue who made a similar request for reinvestigation of
the deficiency assessment tax. This request
was likewise denied for the reason that the assessment in question had long
become final. Respondent Vicente Kho went to the Court of Tax Appeals and asked for the
reversal of the decision of the Commissioner of Internal Revenue imposing upon
him deficiency income tax of P1,128,444.00.
The petitioner here, respondent below, filed a motion to dismiss the
case on the ground that the Court of Tax Appeals had no jurisdiction to
entertain the same by reason of the fact that the appeal had been filed out of
time. The Court of Tax Appeals, in an
extended resolution, denied the motion to dismiss stating that the records on
file with the Court were not clear whether the petition for review was filed
beyond the period of 30 days as contended by the Commissioner. A motion for reconsideration was filed by the
Commissioner praying that the resolution be set aside and reiterating the
motion to dismiss. But said motion was
denied on June 20, 1966. Petitioner
Commissioner of Internal Revenue has come to this Court for relief.
The vital issue for resolution in
this case is whether or not the respondent Court gravely abused its discretion
in not dismissing CTA Case No. 1264, entitled “Vicente Kho
vs. Commissioner of Internal Revenue.”
It is not disputed that the
Commissioner of Internal Revenue sent a letter on October 20, 1952 to respondent Vicente Kho
demanding from him payment of the deficiency income tax for the calendar year
1951 in the amount of P1,128,444.00 and the amount of P3,300.00 as
administrative penalty. This letter of
demand was sent together with an assessment notice dated November 5, 1952. We consider
the letter of the petitioner addressed to Vicente Kho
dated October 20, 1952 as the appealable
decision. It is to be observed that the
decision of the BIR Commissioner contemplated by the statute may be in the
form of a letter addressed to the taxpayer informing him of the final action
taken on his tax liability. Respondent
Vicente Kho should have been more diligent in
ascertaining the tenor of the letter-decision he received from the BIR
Commissioner. Inasmuch as said letter
finally determined or resolved his tax liability,
the 30-day period within which to appeal commenced to run from the date said
letter-decision was received.
In the instant case, respondent
Vicente Kho, through his different lawyers at
different times, wrote the Commissioner asking for extensions of the period
within which to file a motion for reconsideration of the assessment and/or
requested the reconsideration of the letter-decision. Did the Commissioner finally act on the
motions for reconsideration filed by respondent Vicente Kho’s
lawyers?
The records show that on April 29, 1953 the Deputy Commissioner of Internal Revenue wrote
counsel for Vicente Kho advising him that in the absence
of documentary proofs to substantiate the allegations contained in his letter,
“this office cannot reconsider its decision holding him
(Vicente Kho) liable for the payment of the said
sums.” This letter of the Deputy Commissioner of Internal Revenue constituted
the order denying the motions for reconsideration filed by Vicente Kho’s lawyers. This
denial-order was undoubtedly received by the respondent Vicente Kho because on July 7, 1953, his counsel wrote another letter addressed to the
Commissioner of Internal Revenue reiterating that he did not own the books and
records seized from the store in Guiuan, Samar, upon which the computations of the deficiency tax
were based. This letter in no way tolled
the time for appeal to the Tax Court, it being pro forma. The same ground had already been alleged in a
previous letter by respondent
Vicente Kho’s lawyer dated March 28, 1953. It appears,
therefore, that there was a decision [1] rendered by the petitioner Commissioner of Internal
Revenue and also an order [2] denying the motion for reconsideration of the
decision. Respondent Vicente Kho should have availed of the time provided by law to seek
relief. Our attention is invited to the
fact that Vicente Kho only received on January 25,
1954 the decision of the
Commissioner of Internal Revenue demanding from him payment of the
P1,128,444.00 as deficiency income tax.
Even so this afforded him an opportunity to have the decision of the BIR
Commissioner reviewed. Republic Act No.
1125 creating the Court of Tax Appeals took effect on June 16, 1954. The Tax Court
was formally organized on July 21 of the same year. Although it would seem that respondent
Vicente Kho had lost his chance to appeal the
disputed assessment, with the enactment of Republic Act No. 1125 he was given
another chance to seek relief. We held
in the similar cases of Sta. Clara Lumber Co., Inc. vs. Court of Tax Appeals,
G.R. No. L-9833, Dec. 21, 1957, and Lim Tio Dy Hong vs. Court of Tax Appeals, G.R. No. L-10681, March 29, 1958, that such appeal could still be perfected within 30
days from the formal organization of the Court of Tax Appeals. In other words, respondent Vicente Kho had until August 21, 1954 within which to perfect his appeal to the Tax Court
and petition for the review of the disputed 1951 deficiency income tax
assessment received by him personally on January 25, 1954.
Vicente Kho
did not, however, appeal to the Tax Court on or before August 21, 1954. It was only
on August
25, 1962 that Vicente Kho filed a petition for review with the Court of Tax
Appeals. This petition was clearly filed
out of time. In view thereof, the
respondent court had no jurisdiction to try and decide the case.
The contention of the counsel for
respondent Vicente Kho that the petitioner has not as
yet acted on their motions for reconsideration has no merit. The petitioner had long acted on their
motions requesting for a reconsideration of the petitioner’s decision. And the action on their motions for
reconsideration was taken in the letter of the Deputy Commissioner of Internal
Revenue dated April 29, 1953 where counsel for Vicente Kho was advised that in the absence of documentary proofs
to substantiate the allegations contained in his letter, “this office
cannot reconsider its decision holding him liable for the payment of the said sums.” It is therefore
incorrect to say that the Internal Revenue Commissioner has not finally acted
in case of respondent Vicente Kho.
PREMISES CONSIDERED, the petition is hereby granted. The questioned orders of the respondent Court
dated April
15, 1963 and June 20, 1963 are hereby set aside.
The Court of Tax Appeals is enjoined from taking cognizance or
jurisdiction over CTA Case No. 1264
entitled “Vicente Kho vs. Commissioner of
Internal Revenue.” Costs against private respondent Vicente Kho.
Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez,
Fernando, Teehankee, and
Barredo, JJ., concur.
Concepcion, C.J., and Castro, J., on
leave, did not take part.
[1]
Letter of the BIR Commissioner dated Oct. 20, 1952.
[2]
Letter of the Deputy Collector of Internal
Revenue dated April 29, 1953.